Business OpportunitiesTo encourage the others
Googlephone: The Googlephone is coming. Google is escalating its effort to upend the mobile market by introducing a phone it has designed and which is currently being tested on its pointy-headed employees. The search giant"s interest in selling it without operator subsidies means the device probably won"t be a huge hit. But the handset is an important showpiece for the company"s mobile operating system.
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Unsubsidized handsets have never sold well in the United States. Based on other smartphones, Google"s device should cost somewhere between $500 to $1,000. Consumers don"t like shelling out this sort of cash upfront, but they do like shiny new gadgets.
SO carriers typically subsidize purchases — the user pays a reduced price in exchange for being locked into a multi-year contract. Moreover, selling unlocked phones is problematic due to differing standards and network frequencies. For example, if the phone works at blazing speed on T-Mobile, it will probably crawl on AT&T . So then why would Google even consider the idea? Perhaps some people are tired of rivals such as the iPhone and are insensitive to price. Others may run the numbers and realize it’s more economical to pay up front. Or it could be the combination of Google’s free services and some form of subsidy by the company makes it price competitive. More likely, however, is that the Googlephone is an effort to sway perceptions.
Operators have considerable ability to influence handset design. After all, they shell out big bucks to equipment makers to lock consumers into their networks. Network providers have little interest in promoting free internet calling or texting that could cannibalize these low-bandwidth, high-profit services. Google, on the other hand, does. The Googlephone is an opportunity to show how smoothly the company’s free operating system and collection of applications can work together without an operator throwing sand in the gears.
So as a showpiece, the phone may be effective. If consumers only settle for handsets that essentially act as true computers, they will be produced. Google would benefit, as demand for search would rise, and lucrative location based advertising would rocket. For Google, success may not be best measured in the number of devices sold after all. That could be a frightening thought for mobile operators.